Okay, let's start with a very basic question.
A US person has a foreign grantor trust, whose income wholly passes through to the US grantor.
The trust has assets outside the US under its own name: let's call these assets the trust's "stand-alone" assets.
But the trust also owns 98% of a US domestic partnership which in turn has assets under its own name in the US and whose income also fully passes to the US grantor of the trust. This partnership files a normal 1065 partnership return and issues a K-1 to the US grantor.
On the 3520-A, does the trust report:
i) only its "stand-alone" assets and transactions,
ii) both its stand-alone accounts and 98% of the domestic partnership accounts.
If ii), then,
a) separately or
b) as one set of consolidated financial statements or
3) both stand-alone and consolidated accounts?
I hope the question is clear.